Moody’s downgraded to B2 from B1 the long-term local currency deposit and issuer ratings of the two banks, as well as B3 from B2 the long-term foreign currency deposit ratings. It also demoted the baseline credit assessments of GTBank to b2 from b1.

“Today’s rating action follows Moody’s downgrade of Nigeria’s government bond ratings to B2, with a stable outlook from B1, and reflects the government’s reduced capacity to provide support to Nigerian banks in times of stress ...”

It is not obvious what the downgrade implies for the local banks, but an answer could be in the cost of any on-lending to the subsidiaries as stated during the Sh50 billion eurobond borrowing by UBA that was 240 per cent oversubscribed in June.

“We see our subsidiary taking advantage of this significant fundraising to support some of the large tickets we have in our pipeline,” said managing director UBA Kenya Isaac Mwige of the borrowing.